Last night, spot gold prices fell sharply. Selling pressure comes after the US Department of Labor announced that the number of initial jobless claims in the week ended July 12 was only 221,000, much lower than the forecast of 235,000 and down from 228,000 in the previous week.
The four-week average - a less volatile measure - also fell to 229,500 applications, showing a stable labor market.
On the same day, the US Commerce Department announced that retail sales in June increased by 0.6% compared to the previous month, far exceeding the forecast of only 0.1%. This increase completely reversed compared to the 0.9% decrease in May. For the year, retail sales increased by 4.1%.
core retail sales (excluding cars) also rose 0.5%, exceeding expectations and marking a significant recovery in consumer spending.
The "control group" index (an important input factor in GDP calculation) increased by 0.5%, much higher than the forecast of 0.3%. However, the previous month's data was revised down to 0.2%.
This development shows that US consumers continue to spend strongly, contributing to maintaining economic growth momentum despite high interest rates. Some experts believe that this will strengthen the view of maintaining a neutral monetary policy of the US Federal Reserve (FED).
Chris Zaccarelli - Investment Director at Northlight Asset Management commented: " predictions of consumer spending declining are too pessimistic. The figures just released show that they are still spending and supporting the growth momentum of the economy.
Another factor that continues to put pressure on gold prices is a survey report from the FED Philadelphia branch showing that production activities in this area suddenly returned to the growth zone in July, with the corporate confidence index reaching 15.9 points, much higher than the forecast -1 and improving strongly compared to the previous two months, all negative 4 points.
The main components of the report all yielded positive results: new orders, shipping volumes and employment index all increased to their highest level since February.
The input price and selling price indexes also increased again, reflecting the remaining inflationary pressure. More than 60% of surveyed enterprises said that input material prices have increased in the past month.
Immediately after the data was released, gold prices were sold off strongly, falling to $3,312.66/ounce, before recovering slightly. Analysts say a series of positive data on employment, consumer spending and production are reducing demand for gold as a hedge.
Overall, the gold market is under great pressure as US economic indicators show a solid recovery. If this trend continues, it is likely that the FED will not rush to cut interest rates in the short term - a factor that is not in the interest of gold.
Although under pressure, bottom-fishing buying power is also supporting the precious metal very well. Shortly after falling to near $3,300/ounce, world gold prices have quickly recovered.
